What's Germany's Leadership Role In Europe?

Now, as we've been reporting elsewhere in the program, President Obama is in Europe this week for the G8 Summit in Northern Ireland. On Tuesday, he heads to Germany to meet with German chancellor Angela Merkel. Germany is the EU's powerhouse. Its economic success has given the country political power, in part, because it's the region's biggest lender.

Now, despite that power Germany is reluctant to become a leader in the EU and that's hampering broader efforts to solve the region's ongoing economic crisis. Zanny Minton Beddoes writes about this in the current issue of The Economist magazine, and recently spoke to our own Renee Montagne.

ZANNY MINTON BEDDOES: Germany has a very, very profound fear of leadership that comes from a terrible history - the shadow of the 1930s, the shadow before that of Imperial Germany and the First World War are very powerful. And so to lift their heads up, if you will, and act in any leadership role, Germans tend to think of themselves as a bigger Switzerland - economically successful but politically modest.

RENEE MONTAGNE, HOST:

Can you give us, though, an example of what more that Germany could do that it's not doing?

BEDDOES: Absolutely. Let me give you a concrete example right now. One of the biggest kind of institutional changes that everyone in Europe recognizes needs to happen is to create a banking union, to create a sort of unified approach to supervising and resolving banks within Europe. That was agreed on in principle a year ago. Germany ought to be leading the charge to do that properly. What is Germany doing? Over the past year, it's been backtracking, watering down, minimizing this baking union such that it is not going to be able to solve the problems that Europe has.

MONTAGNE: And Zanny, what about the German public? I mean, is there talk about this hesitancy for their country to lead?

BEDDOES: You know, Renee, the whole discussion of leadership in Germany is very tricky, not just because of the Nazi experience, but even the vocabulary of leadership is hard for Germans. You know, the German word for leader is fuehrer, which is the title that Hitler took on himself. And so you can't even discuss the language without Germans almost flinching.

MONTAGNE: But what are the consequences of Germany not asserting itself?

BEDDOES: Well, I think if you look at the euro crisis today, yes, financial markets have become calmer, but I think it's far, far from being solved. If you look at the European economies overall, they're shrinking. Southern Europe is in a deep recession. Unemployment rates - particularly youth unemployment rates - are incredibly high. We haven't really set up the ingredients for really solving the euro crisis yet.

The problem is this small country mentality, if you will, that Germany has prevents it from doing that. And I think it's made worse by the narrative of the euro crisis in Germany, is that they did a lot of reforms 10 years ago to boost their competitiveness. They have good fiscal policy. Other countries should have the same.

And there's a bit of truth to that. But if you actually look at Germany's experience, the comfortable narrative that they have is not quite - I don't think - an accurate reflection of reality. And the result is that they have this recipe that everyone needs to tighten - have fiscal austerity. Everybody needs to boost competitiveness - which, frankly, doesn't really add up, and is sort of insufficient, I think, for solving the crisis.

It's not that it's wrong to focus on competitiveness. It's just not enough. And so the small country mentality that Germany has now - you know, we're just one player, everyone should do what we do - doesn't lead to the right ingredients for this crisis really being solved.

MONTAGNE: You write that Germany needs to shift from a small country mentality to what you call responsible leadership. And you cite the U.S. taking responsibility for the international financial system after World War II. But that's a bit of a tough comparison, isn't it? It occupied the U.S., occupied a very different place in peoples' mind at that point.

BEDDOES: Of course.

MONTAGNE: It was a savior, not a villain, and that's something, again, Germany is wrestling, condemning it.

BEDDOES: Of course, Renee. I'm not suggesting for a minute that there is a perfect comparison between these two situations. But what I am suggesting is that just as the United States after World War II made a decision as a country that it would not turn its back on the rest of the world, but would sense that it, as the most powerful country in the world at that point, had a responsibility to set up the institutions of the post-war system.

So the analogy is that within Europe, in the economic area today, Germany needs to think beyond its narrow, short-term self-interest. Now, it needs to work with others. The European Union is a union where you have to convince others, you have to bring others along. I'm not suggesting for a second that Germans can go laying down the law or bossing others around. My contention is that it has the responsibility, as the powerhouse of Europe, to think about the system more than it does.

MONTAGNE: Zanny Minton Beddoes is economics editor of The Economist magazine. Thanks for joining us again.

BEDDOES: Great to be here, Renee. Transcript provided by NPR, Copyright NPR.